Monday, November 23, 2009

What Is The Debt Settlements Effect On Credit Report?

Before we can discuss the debt settlements effect on credit reports, we need to talk about the debt settlement and briefly describe what it is. Then we can go on to the debt settlements effect on the credit report. The debt settlement is the process of negotiating with the credit card companies of the collection agencies to settle your debt for the certain percentage of the total amount that you have to repay. That amount is usually in the range of 60 to 70 percent. Now that we know what the debt settlement is, we can go on to the debt settlements effect on the credit report.

So is there any debt settlements effect on credit the report? The answer to that question is yes. There are several things (otherwise called as the debt settlements effect on credit report) that the settlement will result in for you on your credit report. The first debt settlements effect on credit report is the fact that the record that states the debt that you settled will show the current balance as zero. Another debt settlements effect on credit report is the fact that the record that states the debt that you settled would show the line that will state that the debt was settled, not paid off in full.

The debt settlements effect on credit report is not big. What does affect your history is what this credit record was before you settled the debt. If you had a collection record before, the debt settlements effect on credit report will be the following: your collection record will remain but it will show that you settled the debt and do not have to pay anything else to this collection agency. The debt settlements effect on credit report is though positive, even though you still have the collection record on your case. The debt settlements effect on credit report will be the lower debt-to-earnings ratio.

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